We track all sorts of metrics for our SEO clients, but what about for ourselves? Columnist Janet Driscoll Miller discusses what agencies should be measuring in order to ensure efficiency and profitability.
As SEOs, we’re always digging into data. But I often find that SEO consultants and agencies aren’t looking deeply into their own data at the metrics that really matter when running a business.
Do You Over-serve Some Clients & Under-serve Others?
We all know the old adage that the squeaky wheel gets the grease. Are you guilty of over-serving some clients and under-serving others?
Under-serving clients in SEO can be a surefire way to lose SEO ground and possibly lose a client. But certain clients can demand more time — in some cases, to the detriment of your project’s profit level and taking away staff from other clients, as well.
To measure this, you’ll need to first understand how many hours you spend on an SEO contract on average. You’ll need to be using a time-tracking system to understand hours spent against each project or client. Are some clients receiving many more hours than others?
Is Each Client A Profitable One?
Profitability is the key to every business, so it’s important that each client and project be profitable. If a client is not profitable, then you’re losing money on the client/project. That’s akin to paying the client to do the work for them. Don’t do that.
To measure this, you’ll need to understand the time and expenses you put forth for each client or project. If you’re using time tracking, you know how much time you’ve spent against a client/project.
Next, you’ll need to understand cost based on the rates of your staff. If you have multiple staff members who work on SEO accounts, each one may have a different billable rate.
It may be helpful to determine a “blended rate” to make it easier to calculate average hours for an SEO contract. Once you know the blended rate, multiply it by the hours for each project/client. Is the cost applied to the client/project less than the price paid by the client? If not, then you may be losing money on this project.
In last month’s post, I wrote about how sometimes you have to part ways with clients for various reasons, and profitability is a major reason to part ways if you cannot reconcile costs and revenue. There can be many reasons that a client becomes unprofitable.
In my case, as my agency grew, my operational costs also grew, thus making legacy contracts less profitable, if profitable at all. Always be examining your costs and revenue, and keep an eye on profitability.
Are You Fully Utilizing Your Staff?
When should you hire your next staff member, or when do you need to reach out for assistance if you’re an independent consultant? It can be hard to tell if you’re not measuring staff utilization.
Staff utilization is essentially measured via “resource load.” The resource load report is often available in most project management software and identifies the percentage of each employee’s day that is spent on projects.
However, don’t wait until employees are 100 percent loaded with projects to consider a new hire. Understand that if you find your staff members are 75 percent or more loaded with client work on average, then they are probably at capacity.
Employees need overhead time to answer emails, participate in company activities, manage other employees and even account for vacation and sick leave, so 70–75 percent is likely a reasonable resource load. If your staff is consistently at averages above 70–75 percent, then it’s likely time to consider adding staff.
On the flip side, if you find that your staff is consistently under 50 percent utilization, then they could be more fully utilized.
It’s important to understand these data as you decide when it’s time to hire and expand.
Tools To Use
To get started with these measurements, you’ll need at least two tools: time tracking and project management. Ideally, you’ll want these two tools combined into one to easily create reports; otherwise, you’ll spend a good deal of time in Excel calculating data. There aren’t too many project management tools on the market that actually combine time-tracking data, and many of the options are expensive for the startup or small business.
If you purchase two separate tools, which can be more cost-effective for smaller businesses, look for a project management tool that will provide resource load reports. For time-tracking tools, look for tools that allow for tracking by project or client. Both tools will need CSV export.
So be sure to track business metrics — they can make a big difference in your profit and growth strategy for your company.
Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.
(Some images used under license from Shutterstock.com.)